In the uncertain world of today, securing your family’s financial future should be high on your list of priorities. One way you can effectively do this is to purchase a plan for term insurance. But with so many choices out there in the market, finding the right policy can be a task in itself. Here’s how to make the decision.
Determine What Coverage You Need
Ask yourself — What do you need to survive, and what do you owe? Consider factors such as:
- Loans due(home loans, car loans, etc.)
- Long-term expenses like your children’s education and marriage
- Household Daily Living Expenses for dependents
- Inflation and the cost of living
A rough rule of thumb is to opt for insurance equal to 10-15 times your income for a year. This way, your family can continue living the life you do, even when you are not around.
Evaluate Policy Tenure
The term plan should be aligned with your financial goals. For instance:
- If you have young children, select one that could cover you over a period until they are financially independent.
- If you have outstanding loans, make sure the policy will cover the repayment period. Choose a longer tenure to eliminate the risk of being uninsured during important life events.
Compare Premium Rates
The most important factor to consider when choosing term insurance is affordability. Premium rates will vary among insurers, so use online calculators to compare them. Remember, though, that a lower premium does not automatically translate to better value. Make an informed decision by considering the features and benefits provided by the policy.
Check Claim Settlement Ratio
Claim settlement ratio (CSR) is one of the metrics used to show what percentage of claims have been settled by an insurer. High CSR indicates reliability and dependability. Look for an insurer with a CSR of 95% or above so that your loved ones do not face any trouble during claim processing.
Look for Riders and Add-ons
It is wise to increase the coverage your policy provides by adding riders, such as:
- Accidental Death Benefit: Pay an additional sum if a member dies from an accident.
- Critical Illness Cover: Payout on diagnosis of serious illness.
- Premium Waiver: Keep the policy in force in case you are unable to pay premiums in the event of disability or illness.
With all these features, you can customize your plan to make it extensive.
Know What Is Not Covered and theTerms
The fine print can explain exclusions, limitations, and waiting periods — all of which you should understand. Policies generally do not cover suicides within the first few years or death due to dangerous activities. Clarify these terms to avoid nasty surprises down the line.
Evaluate the Insurer’s Reputation
Client reviews and feedback offer a perspective on the quality of service that may be expected from a certain insurer. For peace of mind, you need reliable customer support and a smooth claims process.
Conclusion
A detailed evaluation of your financial needs, tenure, and coverage options will enable you to choose the right term insurance plan. By comparing the premiums and claim settlement ratio and customizing the plans with riders, you can choose a policy that offers the best coverage for your family’s future.